Disinflation and deflation mean a decrease in the average price level
a. True
b. False
Indicate whether the statement is true or false
False
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Refer to Figure 12-4. If the market price is $30, should the firm represented in the diagram continue to stay in business?
A) No, it should shut down because it cannot cover its variable cost. B) Yes, because it is making a profit. C) No, it should shut down because it is making a loss. D) Yes, because it is covering part of its fixed cost.
_____ refers to the ways in which a change in the price of a good alters the effective buying power of one's income
a. Wealth effect b. Alternative effect c. Income effect d. Substitution effect
Market failure occurs when no individual has the ability to substantially influence market prices
a. True b. False Indicate whether the statement is true or false
A profit-maximizing monopolistically competitive firm will expand output to the point where:
A. total revenue equals total cost. B. marginal revenue equals marginal cost. C. price equals average total cost. D. price equals marginal cost.